11. Explain the factors contributing to fast growth in international business during recent decades.
Or
12. Explain the major economic indicators the managers take into account before any international business decision.

13. What are the different techniques of exchange rate forecasting? What is forecast error?
Or
14. What impact will the new capital requirements have on international bank expansion on the Euro Currency Market?

17. Mr. Pratap Mehta went to Saudi Arabia for the first time on a business visit in 1998. During his sojourn at Riyadh, he purchased a matchbox for one Riyal. He was surprised at the price of the Matchbox as one Riyal is equal to Rs. 10 (around) and the matchbox in India cost Rs. 0.50 only. The price of a matchbox in Riyadh was ringering in his mind that night. At one point of time he got a wonderful idea.

Mr. Pratap conducted a survey and concluded that the idea was commercially feasible and financially profitable.

Immediately, he approached a consultant in Jeddah and finalized the deal for getting the necessary permissions from the Government of Saudi Arabia.

The consultant arranged to get all the permissions. Mr. Pratap got all the permissions to establish the factory in Jeddah. Then he arranged to import the machinery and equipment from India. After importing the machinery and equipment, Mr.Mehta established the factory and started producing the matchboxes on a commercial scale in January 2000.

Mr. Mehta conducted another market survey and fixed the price of each match box at Riyal 0.50 as the competitors matchboxes were priced at Riyal 1.00 in order to hit all the competing firms and get as much market share as possible.

Mr. Mehta released the first batch of matchbox into the market in March 2000. The first batch of the matchboxes were sold like hot cakes and Mr. Pratap was very much thrilled of his success. He released the second batch into the market but unfortunately he could not sell even a single matchbox of the second batch. The same was the case of the subsequent batches. Mr. Mehta was forced to close the factory.

(a) What were the reasons for highly positive response for the first batch?
(b) What was the reason for very poor response for the second batch?
(c) Why did Mr. Ptatap Mehta fail in his project abroad?
(1 X 24 = 24 marks)
(1 X 31 = 31 marks)